The Israeli military has launched a major offensive against Palestinian militants in Gaza, killing the military commander of Hamas in an air strike and threatening a ground invasion.

The targeted strike against Ahmed al-Jabari drew a furious reaction from Hamas, which said the Jewish state had opened "the gates of hell".

Following the strike that killed Jabari and his bodyguard in Gaza City, Israel pounded the strip with more than 20 air strikes, killing another 10 people, two of them children, and wounding at least 45, Hamas health ministry spokesman Ashraf al-Qudra said.

Who was Ahmed al-Jabari?

Israel said the air strikes were targeting Hamas militants, rocket sites and weapons dumps in a bid to stop days of Hamas rocket attacks on towns in southern Israel.

And it said it was ready to launch a ground attack on Gaza if necessary, warning that more strikes would follow in an operation it has dubbed 'Pillar of Defence'.

Jabari's death came after Israel and Hamas agreed to an informal truce following days of strike and counter-strikes which saw Israel kill seven Palestinians while militants fired more than 120 rockets over the border, injuring eight.

Israel maintained it would still hit those responsible for rocket fire and said it had targeted Jabari because of his involvement in attacks against Israelis.

Jabari's death sparked furious protests in Gaza City, with hundreds of members of Hamas and its armed wing, the Ezzedine al-Qassam Brigades, chanting for revenge in and around Shifa hospital where his body was taken.

As Gaza hospitals and medical centres went on high alert, bracing for more strikes, Israeli prime minister Benjamin Netanyahu convened his security cabinet and held a press conference with defence minister Ehud Barak.

"Today we sent a clear message to Hamas and other terrorist organisations," Mr Netanyahu said during a televised address several hours after the initial strike.

"If it becomes necessary, we are prepared to expand the operation. We will not tolerate a situation in which Israeli citizens are threatened by rocket fire."

The Israeli army said it had targeted "a significant number of long-range rocket sites".

"People seven kilometres away from Gaza have been told not to go to work tomorrow and schools in a 40km radius have been cancelled," he said. "We've also got reserves from Israel's home front command being called up. They do things like check on civilian access to bomb shelters in the area."

He says Israeli forces are being readied for a ground offensive, and there are reports Israeli ships have been positioned off Gaza.

He says there is also speculation about the timing of the strikes, which come ahead of Israeli elections scheduled for late January.

It plays out politically in a number of ways. There are internal elections under way in Hamas.

Of course [they are] not transparent but it will be interesting to see what this does to that process.

There are Israeli elections on in late January.

Now, I've heard Israeli politicians from the far left even on Israeli radio tonight being asked, 'Do you think this is all about the play up for the elections?'

And they say it's not.

But there are political insiders here, the residents of southern Israel, who do deal with these rockets regularly, demanding more be done and a greater deterrent established in the Gaza Strip.

At the moment you may say there is no greater deterrent than killing the leader of the most powerful and entrenched militant group in Gaza.

Middle East correspondent Matt Brown

In neighbouring Egypt, foreign minister Mohammed Kamel Amr condemned the violence and called for an "immediate stop" to attacks on Gaza, warning against an "escalation and its possible negative effects on regional stability."

Britain also called for restraint while Washington said it was watching developments in Gaza "closely".

A White House statement said US president Barack Obama called Mr Netanyahu to urge him to "make every effort to avoid civilian casualties".

"The two agreed that Hamas needs to stop its attacks on Israel to allow the situation to de-escalate," the statement said.

Israeli army spokeswoman Avital Leibovich said the air strikes were just the start of an operation targeting Gaza militants, and had been authorised by chief of staff Lieutenant General Benny Gantz.

"After the rocket fire of recent days, the chief of staff has decided to authorise the targeting of terrorist organisations in the Gaza Strip," she said.

"This is the beginning. This man, Ahmed al-Jabari, has a lot of blood of Israeli people on his hands. Not him alone unfortunately, there are many other terrorists inside Gaza. And we will do whatever we need and continue as long as we need."

Israel Ziv, former head of the army's Gaza division, said the strike was "a very clear message to Hamas."

"This is the beginning of a larger operation that will go on for the next few days," he said.

"There will surely be an escalation."

Israel's last major operation in Gaza began at the end of December 2008, just six weeks shy of general elections, when troops embarked on a 22-day campaign which led to the deaths of 1,400 Palestinians and 13 Israelis.

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